§Lords amendment: No. 86, after the clause last inserted insert the following new clause—
.—(1) This section applies to any tenant of a publicly funded dwelling-house who, but for subsection (1) or (2)(a) of section 2 of the 1980 Act (exception for cases where landlord is a charitable housing association etc.), would have the right to buy; and a dwelling-house is publicly funded for the purposes of this section if housing association grant has been paid under section 29 of the 1974 Act in respect of a project which included—

(a) the acquisition of the dwelling-house;

(b) the acquisition of a building and the provision of the dwelling-house by means of the conversion of that building; or

(c) the acquisition of land and the construction of the dwelling-house on that land.

(2) The Secretary of State may pay housing association grant under section 29 of the 1974 Act to an association registered under section 13 of that Act in cases where the association first acquires a dwelling-House and then disposes of it at a discount to a tenant to whom this section applies.(3) Where an association registered under section 13 of the 1974 Act contracts for the acquisition of a dwelling-house and, without taking the conveyance, grant or assignment, disposes of its interest to a tenant to whom this section applies, subsection (2) above and the following provisions, namely—

(a) section 122 of the 1980 Act and sections 104B(2) to (9) and 104C of the 1957 Act as applied by that section (disposals by housing associations);

(b) Part II of Schedule 1A to the 1980 Act (qualification and discount);

(c) section 2 of the 1974 Act (consent of Housing Corporation to disposals); and

(d) section 9(2) of that Act (loans by Housing Corporation),

shall have effect as if the association first acquired the dwelling-house and then disposed of it to that tenant.(4) A housing association which is a society registered under the Industrial and Provident Societies Act 1965 may have among its objects that of effecting transactions falling within subsection (2) above without preventing the association being or, as the case may be, remaining registered under section 13 of the 1974 Act.(5) In this section "dwelling-house" includes a house within the meaning of the 1957 Act.

With this it will be convenient to discuss the following: Government amendment (a), line 35, leave out subsection (4) and insert—
543'(4) Section 13 of the 1974 Act shall have effect as if the additional purposes or objects mentioned in subsection (3) of that section included the purpose or object of effecting transactions falling within subsection (2) above.'.
Consequential amendment No. 1, in schedule 10, page 88, line 19, at end insert—
' In subsection (1) of section 127 of that Act (registration of housing associations) for the words from the beginning to "its objects" there shall be substituted the words "Section 13 of the 1974 Act (the register of housing associations) shall have effect as if the additional purposes or objects mentioned in subsection (3) of that section included" and the words from "without" onwards shall be omitted.'.
Consequential amendment No. 2, in schedule 11, page 90, line 47, column 3, at end insert—
'In section 127(1), the words from "without" onwards.'.
Privilege is involved in Lords amendment No. 86.

The amendment will help the one group of people who rent homes that were built with public funds who are currently denied the right to buy because of the charitable status of their landlord. The Government make no secret of the fact that they would have liked such tenants to enjoy the right to buy on the same basis as other public sector tenants. That was the Government's original intention. However, we recognise the strong feelings that our proposals aroused in the housing association movement and in another place and we do not propose now to go down that path. However, we propose to do something for the tenants in the group to which I have referred, many of whom have by chance ended up as housing association tenants rather than local authority tenants and thereby find themselves denied the rights that they would otherwise have been given. I know from my constituency mail that many of these tenants were disappointed by the loss of the former clause 2 and are now anxiously awaiting the implementation of the proposals that we have introduced.

The scheme that the Government propose meets the main objections which were voiced in another place and in the housing association movement. Broadly, it will give the cash equivalent of the discount that the tenant would have been given to help him buy another property of his own choice. The proposal avoids reducing the stock of charitable housing association houses and flats for rent, which was the main concern of the housing association movement. It will release a home for those who are on the waiting lists of the charitable housing associations. It will bring help to those on the waiting list at an earlier date than might otherwise have been the case and at a fraction of the cost of building a new unit. It will also bring home ownership within reach of more people, which means that it will be in line with the Government's overall policy. I am therefore somewhat disappointed, though not altogether surprised, that the Labour party is opposing the new scheme, which has been broadly welcomed by the National Federation of Housing Associations and by many of those who are active in the housing association movement.

Subsection (1) defines eligible tenants. Subsection (2) extends the Secretary of State's power to pay grant to fund the costs of each transaction, including the discount. Subsection (3) is a technical provision that will allow the transaction to proceed by way of sub-sale, ensuring that
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normal requirements, such as the need for housing corporation consent and the statutory discount repayment covenant, apply, and enabling the Housing Corporation to offer mortgage finance to qualifying tenants in such circumstances.

Subsection (4) enables non-charitable registered housing associations that wish to participate in the scheme to extend their objects without prejudice to their registration with the Housing Corporation. The subsection is the subject of a minor technical drafting amendment—amendment (a)—which requires further consequential amendments to the Bill. These are Lords amendments Nos. 1 and 2.

Is the Minister's reference to housing finance being available to the Housing Corporation a new concept? He seems to be saying that the corporation will be acting as a sort of building society. Was that intended?

When my right hon. Friend introduced the scheme just before Christmas he referred to the arrangements that would be made. In fixing the Housing Corporation's budget for the coming year, we have taken into account the money that it will need to operate the scheme. We have given assurances in another place that we have safeguarded Housing Corporation interests by taking into account the estimated amount of money that is needed when we fixed its budget. I am happy to repeat that assurance.

Will the £10 million estimate of the scheme's cost to the Housing Corporation be increased as a result of the proposal that the corporation should fund the discounts given to charitable tenants to buy elsewhere and make up the balance of the purchase price of another property? Does the £10 million include the discounts and the estimated loans?

Secondly, the Minister has already made it clear, although I do not remember where, that funds for the scheme will come from the moneys otherwise available for housing association schemes of new build, improvement and conversion. Will the £10 million or so be divided and deducted from the budgets of individual housing associations or will it be taken generally from the housing association movement?

The £10 million has not come out of the funds that would otherwise have gone to particular housing associations. I can reassure the House that when we made available the corporation's resources we took into account resources that would be needed for that scheme. The £10 million must be found by the Housing Corporation to provide the money required by the housing associations when a tenant exercises his right to buy.

The housing associations will be refunded by the Housing Corporation for the costs involved in funding the discount.

On the second point raised by the hon. Member for Norwood (Mr. Fraser) the estimate of £10 million is the best that we can make. It compares with the national federation's estimate of about £14 million, so we are dealing with roughly the same figures. We have reconsidered our estimate in the light of the national federation's estimate, but we stand by our own. It is based
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on experience of operating the right to buy for a non-charitable housing association, and is not significantly out of line with the national federation's estimate.

One of the arguments that the Minister and other Conservative Members have put forward for the sale of council houses is that the discount money—the public expenditure used to provide discounts—is justified because capital receipts from council house sales can be used for more public sector housing. Will not the new scheme do just the opposite by using public expenditure as handouts to the tenants of housing association flats, so that they can buy other owner-occupied properties, without having to provide capital receipts before being provided with new accommodation?

What is more, even though a vacancy would be created thereby and a new tenant could move into a housing association dwelling, he could also exercise his rights under the new clause. He would receive a further discount on the same property because he would bring with him the benefit of the length of time that he spent in another public sector dwelling to be used to acquire a discount into that housing association dwelling.

On the hon. Gentleman's second point, it is most unlikely that a charitable housing association whose objectives are strictly defined would rehouse someone who had already left housing association property and become an owner-occupier, thereby qualifying for a discount the second time around. I do not believe that many housing associations would rehouse such an applicant.

I shall not give way. The hon. Gentleman skated over the significant advantage of securing a vacancy for those on a housing association waiting list at about £6,000 to £7,000, which is a fraction of the cost of building a new unit, which costs about £30,000. That is one of the scheme's great advantages.

I should like to make progress. No doubt the hon. Gentleman will catch your eye, Mr. Deputy Speaker, if he wants to intervene again.

The provisions that I have outlined provide a statutory framework for the scheme, and the details will be dealt with administratively. It is intended that a discount funded out of housing association grant will be based on the discount that a tenant would have received if he had the right to buy the dwelling in which he lives, adjusted in a way that I shall explain later, in the light of an open market purchase value. Shared ownership will be available to those who cannot afford outright purchase, with a minimum share of 50 per cent.

To take up the point made earlier by the hon. Member for Norwood, we foresee that some tenants might require Housing Corporation mortgages, which is a discretionary power taken into account in the £10 million provision.

The scheme addresses an anomaly and encourages home ownership in a modest way, as I said earlier to the hon. Member for Bootle (Mr. Roberts). It frees publicly funded charitable housing association dwellings for reletting in accordance with the purposes of the charity.

Concern has been expressed about possible abuses of the scheme, so I hope that I shall be able to reassure the House. We propose to introduce upper limits on the value
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of purchases of £40,000 in London, £35,000 in the home counties and £30,000 elsewhere. Once the right-to-buy discount has been established on a rented dwelling taking the cost floor into account, it must be adjusted to take account of the value of the property to be purchased. The discount received by a tenant under the scheme will never be higher in cash than he would be entitled to under the right to buy; nor would it be a higher percentage of the purchase price than the tenant would have obtained if he were buying his existing dwelling under the right to buy. If the tenant purchases on shared ownership terms, the discount will be scaled down in proportion to the size of the share. Such safeguards mean that tenants will not be able to use discounts to acquire a house on the open market for little or no contribution of their own.

We also propose to introduce a requirement that the tenant should have occupied the rented dwelling, for at least two years before participating in the scheme. Together with the major safeguard in the requirement for charitable landlords to let only to tenants who conform with their charitable objectives, that requirement will prevent successive tenants being moved into particular dwellings, so as to obtain large discounts under the scheme. That may have been the point made by the hon. Member for Bootle.

It has been suggested that the scheme will distort the housing market, but such fears are much exaggerated. The proposal is far too modest to cause a ripple in the market, in which the element accounted for by first-time buyers alone amounts to many billions of pounds.

If the £10 million covers discounts and mortgages granted by the Housing Corporation at an average price of £20,000 for a house bought outside the charitable sector, that would allow the tenants of charitable housing associations to buy 500 houses. Can the Minister confirm that he expects that about 500 people would exercise the right to buy? Would significantly fewer housing association than local authority tenants exercise that right? The Minister must have some figures available to show how many people have exercised the right to buy, which I believe to be one in 20 council tenants.

The hon. Gentleman has assumed in making his estimate that the mortgages available will not be provided by the private sector. We hope that they will be provided in that way. The hon. Gentleman's calculations are somewhat pessimistic. Many more purchases can be funded from the £10 million allocation.

The measure is important because it will help housing association tenants who wish to become home owners as well as those on the waiting list. It has been broadly welcomed by the housing association movement.

I commend to the House the Lords amendments, together with subsequent amendments.

As Conservative Members are aware, this is the first opportunity that we have had to debate this scheme in the House. The Minister skated over that point.

We first heard about this matter in a written answer on 21 December, and this is the first chance the House has
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had to examine it. That is not good enough, because this is an important and, in a sense, major departure. Clearly, the Government are trying to get round a problem. Originally, they wanted to allow this type of accommodation to be bought and to give the tenant the right to buy the other house. They then decided otherwise, but eventually came under great pressure from their supporters, who attempted to reverse the decision of the other House and, consequently, the legislation. The Government have now come forward with this compromise.

This is a disgrace for three reasons. First, as I said earlier, this is the first time that the House has had a chance to debate the matter, and there is no excuse for it not having been introduced and discussed earlier. In our view, the scheme should have been introduced before the legislation left this House and went to the other place.

It is also disgraceful because, like the rest of the Bill, the scheme offers what I can only describe as petty measures of liberalisation. It does not provide new resources for an expanding house building programme, which is what the country desperately requires at present.

Worst of all, it is disgraceful because the Government are proposing to give large cash handouts to a relatively small number of tenants. Even if the private sector provided all the mortgages, only between 1,000 and 1,250—at a stretch, possibly 1,500—dwellings would become available. Clearly, therefore, only a small number of tenants will be involved.

Those fairly privileged few are already in good accommodation, unlike millions of others, yet they are offered a scheme under which there will be no cash limits or waiting lists and which will be funded at the expense of other Housing Corporation projects, as well as at the taxpayers' expense in the long run.

Personally—I believe that this goes for most of my colleagues—I see no merit in this scheme. It has merely been introduced because of the dogmatic approach that Conservative Members have adopted towards public housing.

In the debate in the other place, the Minister of State said the Government recognised the case to deal "fairly" with tenants who live in housing association rented property. The word "fair" has been used by Conservative Members for a long time, and I always get worried when I hear them talk about how fair they will be or about how fairly they will treat people and deal with matters. It sends a slight shiver down my spine when Conservative Ministers, both here and in another place, use that word.

We must also consider those who will not benefit from the scheme. It will not help tenants of charitable housing associations who live in houses built before 1974, nor will it help tenants of private landlords.

I am not certain whether I am allowed to quote the proceedings in another place, and if I am not, I shall not——

Thank you, Mr. Deputy Speaker. I had forgotten that. I wanted to quote a Minister in the other place, who said:
The Government have always recognised the overwhelming case to deal fairly with these people and to help those who want to take on and who can afford to take on—and I accept that they may not be very many in number—the benefit and responsibilities of home ownership. That is why we have come forward with this scheme".—[Official Report, House of Lords, 6 March 1984; Vol. 449, c. 193]
I am sure that thousands of tenants of private landlords would like to take on the responsibilities of home ownership. I am sure that they would love to obtain a grant or assistance to enable them to buy another house and even to obtain a mortgage, perhaps from the Housing Corporation or some other such body. However, they will receive no assistance whatever. Therefore, the Government draw the line at those in public dwellings, and the scheme will not be extended to those in private dwellings. Equally, it will in no way benefit the tenants of private landlords. It will not help council tenants living in flats or houses that no one would willingly buy, and it will certainly not help the average potential first-time buyer.

The Government estimate that the scheme will cost £10 million a year. Even with 100 per cent. mortgages, we have worked out how many people that will involve. The National Federation of Housing Associations puts the figure at £14 million. Together they suggest an expenditure of between £50 million and £70 million over a five-year period, yet for that sum not one new home will be built. Unlike the right-to-buy schemes, no receipts will be generated to compensate for the diversion of Housing Corporation funds away from new projects.

The figures that I have just given are conservative estimates. The National Housing and Town Planning Council and the AMA have calculated that the scheme will cost £19 million in the rest of this financial year, £38 million in 1985–86 and 1986–87, and that thereafter it is likely to tail off. On their calculations—after all, these people keep a close watch on accommodation and housing projects generally—the scheme could cost £95 million over the next three years without one new home being built. The £95 million could have built 3,800 new houses. The Housing Corporation has already said that its cash limit for 1984–85—£617 million with another £70 million from receipts—is insufficient to meet its commitments. If it completes its 1983–84 programme in full, there will be nothing left for new projects for 1984–85. There is now an effective moratorium on Housing Corporation spending, and this new scheme can only make matters worse.

A vote for the Government's new clause is a vote for fewer homes, not more. It is a vote to make the national housing shortage worse rather than better.

I quote from an editorial in The Times on 6 March:
The proposal … is for a hand-out; money has already been earmarked in the public accounts for 1984–85. Lord Bellwin today asks for power to allow the Secretary of State for the Environment to make grants to charitable housing associations for buying property on the open market and then selling it to their tenants at a discount. The effect is to endow those tenants. They are, it appears, to acquire the 'right' to claim from their landlord a capital sum that could—for all the Government has admitted—total the entire purchase price … The House of Lords has an obligation today to smoke out Lord Bellwin.549
Unfortunately, the House of Lords did not completely succeed in smoking out Lord Bellwin, although an interesting speech was made and some interesting facts made known. The article continued:
His only defence is the need to treat 'public' tenants consistently, an argument to be refuted by reference to the markedly different legal status of housing associations which are charities and are enjoined by the charity commissioners' rules to specific purposes of alleviating want.
I understand, Mr. Deputy Speaker, that I am allowed to quote from Lord Bellwin's reply to a letter written to him by Baroness Birk on 6 March. Lord Bellwin said:
The estimate is not a cash limit for the scheme, although it will be funded from the Housing Corporation's ADP, which has a net cash limit".
We have just discussed that matter, so I shall not repeat it. Lord Bellwin continued:
If take-up in the first year is significantly greater than the estimate we have made, the implications for the shape of the Corporation's programme for the remainder of the year would depend on the size of the variation and the scope for change in the other elements which make up the programme.
That is the point. If many people became involved, the other elements of the programme—taking over and modernising dwellings, and providing accommodation for ordinary people and those in need—could not be funded. That is a very backward step. There will be less money for adaptations and in other directions.

The new clause has been brought forward only because of Conservative ideology. It has not been brought forward because it is good, because it is essential, because it will help forward the housing programme in any way, or because it is fair. Indeed, it is grossly unfair to thousands of tenants who will be given no assistance.

According to Lord Bellwin in another place, the purpose of the measure
is to enable the Secretary of State to pay housing association grant so that tenants of publicly-funded dwelling-houses, excluded from the right to buy because of the charitable status of their landlord, may puchase a house, or a share of a house, on the open market, on similar terms to the right to buy."—
[Official Report, House of Lords, 6 March 1984; Vol. 449, c. 192.]

The House of Lords, the National Federation of Housing Associations and the housing association movement were able to combine in opposition to the Government's proposals to give the tenants of charitable housing associations the right to buy. Those tenants, who—by chance, as the Minister said—are housing association tenants and not council tenants, are now to be given cash handouts of public money to leave their dwellings and buy a house in the traditional owner-occupier market. They may be given £10,000, £12,000 or more of public money.

There is no precedent for such a scheme. The National Federation of Housing Associations has welcomed and supported it. In my view, the federation should be ashamed of itself. In supporting the scheme, it has sought the easy way out. In the past, the federation has campaigned for and supported those in housing need—the people whom the housing associations were set up to assist. I was proud of the campaign that the federation waged to be allowed to continue to fulfil its traditional role of providing accommodation for those in need, through its member associations. But the federation has now fallen for the Government's three-card trick.

The proposal also reveals the nature of the Government's right-to-buy provisions in the general
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public rented sector. They have given hidden cash handouts of ratepayers', rent-payers' and taxpayers' money to those who have the right to buy council properties as sitting tenants. Their argument and their justification was that they were enabling sitting tenants to buy the homes that they had lived in and paid rent on for a long period and in which they wanted to continue to live. That was the Conservative party's justification for the large discounts on purchases in the public rented sector, and in this case that argument goes by the board.

In an intervention I have already mentioned the Government's other argument. They argued that a public body such as, for instance, a non-charitable lousing association to which the right-to-buy provisions apply, or a local council, which sold a property—taking account of the discount—could use the capital thus acquired to replace the asset that had been sold, or for other capital housing purposes. That argument also does not apply in this case.

The Minister will say that the housing association property which is released can be offered to someone else. However, whether the Minister admits it or not, the position is as follows. The new tenant may at some time have lived in another public rented property. He may have lived in a council house in another area. He may have lived for 10 years in a walk-up block of fiats, an inter-war property which the council then knocked down, and he may have been rehoused not into a council property but into the property of the housing association. Such a person could move into the dwelling whose outgoing tenant had just been given £10,000, and after a few months he too could collect £10,000 of public money in order to buy another property.

The Minister may have wished to misunderstand me. The housing associations will not, of course, house someone who has been an owner-occupier, but they will house in the dwellings that become vacant people who have built up time in the public rented sector which will enable them to qualify for another large discount. The same dwelling could be discounted repeatedly, month after month and year after year, as new tenants moved in. That is an amazing proposal and we should examine the precedent that it sets. It will take away from the housing association movement a substantial amount of money which would have been used, through the Housing Corporation, local authorities and housing associations. to build more dwellings or to acquire, modernise and improve dwellings.

It is obvious that a massive number of people in charitable housing association accommodation will take up the offer. It is like winning the pools. Unfortunate enough to be a housing association tenant? A person on the waiting list in Sefton who cannot get a council flat and instead acquires a dwelling that has recently been built by the Merseyside Improved Housing Association will, in three or four years, be given a cash handout to become an owner-occupier. Not so the unfortunate person who, having been on the waiting list or in a slum clearance area, has been put into the diminishing stock of housing in Sefton which is now confined to flats or one of the problem estates, as the best housing there has already been sold.
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Unlike all of the other people on the waiting list. such a person will be rewarded with a decent house. Some people in my area think that they have won the pools if
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they are offered a decent house, as they have had to wait so long because rented accommodation is in such shortage. In addition, such a person will get a few thousand pounds if he has not done the years of service in public rented property necessary to buy a house. What will that mean to people in inadequate accommodation, people on the waiting list and the homeless? There will be a flood of people taking up the offer, as much housing association property is extremely good compared with council property and privately rented property. The vast majority of it has been built since 1974. Indeed, much of it is new as it was built in the days of the Labour Government after the Housing Act 1974 which provided for public money to be used. There was a massive increase in housing association property, all of which is extremely good.

The precedent that the Government are setting gives the next Labour Government an opportunity to pursue their example for the benefit of people who are in real housing need. If we are to have the right to buy, and if public money is to be handed out so that people can buy, what about the right to rent and the right to sell? The Government are giving us an amazingly good precedent. How about a law requiring that anyone on a council house waiting list who is in housing need has the right to require a local authority to give him a grant or discount to purchase property? How about someone on the council waiting list having the right to require the local authority to purchase a property in the private market and then rent it to him?

As we have accepted the principle of the right to buy and the right to rent, we should extend it and use public money for the benefit of people in real housing need. How about the rights of the owner-occupier who becomes elderly and cannot afford the upkeep of his dwelling? Why should he not be able to sell that property to the local authority and then rent it back?

What about the right of tenants in the private rented sector? We have often demanded that the right to buy which is enjoyed by council tenants should also be enjoyed by tenants of private landlords. The Government say that we have no right to do that because the property concerned is privately owned and that we can enforce sales only on public assets. Introduction of the proposed scheme to the private rented sector would mean that we would not have to force the private landlord to sell his assets as we could give the private tenant a discount and enable him to become an owner-occupier. There is no reason why we should not do that, as the 12 per cent. of tenants who rent in the private sector are the most disadvantaged in terms of housing conditions, repairs and rents. They are far worse off in those terms than tenants of charitable housing associations. Why should not such tenants also have cash handouts?

As my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, this is one of the most doctrinaire pieces of housing legislation that we have ever come across. I hope that the House will defeat it. If it does not, I hope that the Labour party will adopt the type of remedy that I have suggested. I hope that, when Labour becomes the next Government, it will apply the precedent that the Government are now setting on the right to buy to the right to rent, and use public money to that end. Such money should be used for the benefit of people in the private rented sector, those in housing need, those on public housing waiting lists and the homeless.

Any one who wants to hear a stale old argument will never hear it better expressed than by the hon. Member for Bootle (Mr. Roberts). I am happy to be called an ideologue in this sense. I am happy to have ideologies and ideals and I am glad to support this scheme which puts those ideals into effect for thousands of tenants of charitable housing associations who were denied the right to buy on the same basis as council tenants.

When I was Member of Parliament for a new town, literally hundreds of my constituents took places on waiting lists, almost at random between the local district council and charitable housing associations. Many were deeply disappointed when they discovered that the right-to-buy provision applied to those who had taken council houses or non-charitable housing association property but not to people whose housing association—all power to its elbow—happened to be a charity.

This scheme puts that right for those thousands of people. It gives them the opportunity to become homeowners and to have all the benefits associated with home ownership which the hon. Member for Liverpool, Walton (Mr. Heffer) recognises. I am glad that he recognises that it is of real advantage for people to be able to own their own home. I am sorry only that the hon. Member for Bootle should speak of such provisions so bitterly. The Opposition should welcome the fact that, when tenants of charitable housing associations take up the scheme and buy into the private sector, a nice charitable housing association house will become available for someone else who might have less good accommodation or be on the council waiting list. Did I hear a word of welcome for that good purpose from the Opposition? I did not. There were nothing but grumbles.

I recognise that there were difficulties for charitable housing associations in accepting the original scheme which applied to non-charitable housing associations. It is greatly to the credit of charitable housing associations that they have approved this scheme which will give their tenants, like council tenants, the opportunity to become home owners and will make new places available for people who need them. I warmly welcome the scheme. It shows sensible flexibility and imagination on the part of the Government and charitable housing associations.

I congratulate my hon. Friend the Under-Secretary of State for the Environment on the immensely hard work that he has done in formulating the scheme, encouraging it to be advanced in another place and so skilfully managing matters that it is before us today so that we have an opportunity to vote in favour of it. I shall vote in favour of the scheme with a will because it puts right what has long been wrong. It should be warmly welcomed.

Statistics show that 80 per cent. of my constituents live in council accommodation, 16 per cent. in charitable accommodation and between 3 and 4 per cent. in private accommodation. The figures are extreme because Southwark and Bermondsey has the highest proportion of public sector housing of any constituency in England.

Although some of the arguments deployed by the Government are true, they are also illogical. When people who are looking for housing have a range of rented accommodation available to them, they will first look to the local authority. If it cannot accommodate them, they will turn to a charitable housing trust or housing
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association. If they fall within the definition of those whom such a body can house, they may be housed more quickly than by the local council, which may have a longer waiting list. They may be able to move even more quickly into private rented accommodation. That does not apply in my constituency, but it does elsewhere.

If, after being housed, tenants of a charitable housing trust wish to leave, they are normally in a less advantageous position than public sector tenants because there is less choice in the charitable housing market—for example, the Peabody Trust, the Guinness Trust and housing associations such as Provident Life Association of London Ltd.—than in local authority housing stock. If they wish to buy, they will also be at a disadvantage having accepted housing, whether by chance or accident, compared with tenants of the local authority. Then the difference manifests itself.

If the House supports the amendment, people will receive compensation from Government funds through the Housing Corporation rather than under the right-to-buy provisions, where the local authority effectively contributes the advantage to the purchaser.

I am worried that the wording of the amendment in subsection (2) is inadequate. It says:
The Secretary of State may pay housing association grant under section 29 of the 1974 Act to the association registered.
It should say that the Secretary of State "shall" pay grant.

My first objection, therefore, is that there is no guarantee of an exact payment of the total sum paid to those people to compensate the public sector in terms of housing resources for the money taken from it for people who purchase under these provisions. Will the Under-Secretary undertake to assure the House, not that the matter will be considered, but that compensation will be paid to the public sector housing fund—the Housing Corporation's budget—to meet each and every cost it must bear of paying people who buy under the provision?

Insufficient money goes into the public sector housing or the Housing Corporation to meet their needs. We must be assured that the Housing Corporation will not lose even £1 and that we shall not proceed by negotiation, exploration and a see-how-we-go approach.
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The Government rightly believe, as all parties believe, that if people can buy they should be able to do so. That is a good thing because it gives people independence and control of their homes. The Government started by giving the right to buy in the public sector—now is not the time to raise the substantial objections of the Liberal party to that scheme—and now seek to extend that with a broad brush. Our arguments in this House and a vote in the other place prevented charitable associations from having to give up.

Other bodies will now be disadvantaged because private purchasers will not be able to buy when they have rented private accommodation for a considerable period. If the Government believe in enabling tenants to buy their homes, they must adopt a consistent attitude to all tenants, no matter whose tenants they are. Secondly, will the Parliamentary Under-Secretary explain the difference which allows people in public housing a right that is not given to the other two categories of person?

Thirdly, will the Secretary of State explain why, under the amendment, we shall have to change the objectives of
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housing associations? An ancillary amendment before the House today deletes what was inserted in the House of Lords in subsection (4). New subsection (4) states:
Section 13 of the 1974 Act shall have effect as if the additional purposes or objects mentioned in subsection (3) of that section included the purpose or object of effecting transactions falling within subsection (2)".
If the aim is to widen the objectives of housing associations—publicly funded bodies which provide housing—it is inconsistent to amend the Bill so that those bodies effectively do themselves out of that role.

The country needs a mixture of housing. As phrased, the amendment simplistically says that there are two sorts of housing—public sector and private sector—and that private sector housing is always best. It seeks to advantage the private sector and the private occupant over the public sector.

Over the years charitable housing with public funding created a third sector between the public and private sectors. That housing sector does not have the great bureaucracy or the municipal attitudes and appearance of enormous housing estates. It meets housing needs that were not otherwise met. The Goverment's inconsistency in not respecting the right of that third sector to continue in existence until the enormous needs are met—they are not met yet—is the fallacy behind the amendment and the reason why Liberal Members will vote against the Bill.

Last Thursday I had a public meeting with many charitable housing association tenants in my constituency, at which we discussed the Bill. After talking to them at length about the so-called right to repair, which the House will discuss later, we talked about the right-to-buy provisions of the Lords' amendment and the Government's scheme. Their reaction was extremely interesting. They recognised that it gave them an extremely lucrative opportunity, but that it was grossly inequitable that they should be advantaged in that way when no other sections of the community were.

I had to be completely honest with them and say that I opposed the proposal root and branch in the interests of the general good rather than in their interests as individual, prospective purchasers. Their agreement with me on that extremely important point both surprised and pleased me. Clearly they saw the basic point that the Opposition would make against the proposal: that the Government, in order to get themselves off a legislative hook, have come up with a scheme that is profoundly inequitable in concept and practice.

Why are the Government bringing forward a proposal to give cash handouts to charitable housing association tenants but not introducing this scheme for the tenants of private landlords? Whenever the Opposition have asked, "Why is the right to buy good enough for the public sector but not for the private rented sector?", the Government have replied, "We are talking about property in the hands of landlords, which should not be touched by legislation." If that is so, why cannot the Government come up with a similar ingenious scheme which preserves the property in landlords' hands but gives cash handouts to the tenants? If they had the interests of private sector tenants at heart, they would try to introduce such a scheme.

After the Easter recess the House will have the opportunity to debate a Bill that will give the right to buy to tenants in the private rented sector. I challenge Conservative Members to vote for that Bill,
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unless they wish to prove to the public what they are not in favour of extending the frontiers of owner-occupation, but are merely in favour of attacking the public rented sector.

I am privileged to be a sponsor of my hon. Friend's Bill, which I hope the House will pass with acclaim.

Our principal objection to this proposal is its inequality, which should be enough to dismiss it immediately. The Government estimate that they will have to give the Housing Corporation £10 million as an extra amount—although their definition of "extra" is different from that of most normal mortals—to provide the cash discounts that will be a gravy train for one set of people in our community. That estimate is grossly inadequate, because housing association tenants will realise that it is an extremely lucrative proposal. If someone said to me, "Here is £6,000 or £10,000—go and buy yourself a house", I would find that an extremely attractive proposition. The tenants of housing associations will take up this scheme in great numbers, and the Housing Corporation will have to spend much more than the £10 million which the Government have set aside to implement this clause. Where will the Government get that additional money? Will it be deducted from the amount that the Housing Corporation has to spend on the development of new housing or the rehabilitation of old housing elsewhere in the country?

If the money is to come from a central pool, will it be allocated to individual housing associations? There are two excellent housing associations operating in my constituency that do not have much property. If many people exercised the rights under this clause, would the Government say that there is a bottomless pit of money available, or would they say, "We are sorry but we do not have enough money. You will have to sell some of your property in order to fund this process"? The Government should give the House a guarantee that no housing association will be forced to sell property for that purpose. If they cannot give us such a guarantee, we can draw our own conclusions.

This legislation is inequitable, impractical and grossly inadequate. I and my colleagues will oppose it.

This subject is very close to my heart. I mentioned it in my maiden speech, and my hon. and learned Friend the Member for Mid-Bedfordshire (Mr. Lyell) and I mentioned it in Committee. I am glad that this amendment has come before the House.

My hon. and learned Friend the Member for Mid-Bedfordshire referred to some of the problems that he encountered when he represented part of my constituency. If this amendment is not passed, the present inequitable position will continue, which cannot be right. Many of the tenants of charitable housing associations in my constituency are tenants purely by chance. Indeed, in many cases their houses are identical to the local authority houses down the road. At one time one person was being taken off the waiting list into local authority housing for every one person taken off the waiting list into charitable housing. However, the charitable housing tenants do not have the right to buy their homes.

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I could have understood that had the charity provided most of the money for the housing development, but it did not; 98 per cent. of the money for the largest development in my constituency—the Sutton estate—was provided by the Government. The charity provided the remaining 2 per cent., not for property development but for environmental works on the estate. Yet housing associations have used that relatively small amount of money to prevent tenants from buying their homes.

I should have preferred a continuation of the Government's original scheme to give the right to buy to those charitable housing association tenants, but I understand the practicalities. However, Ministers have come up with an alternative scheme that has already been welcomed in my constituency by many tenants who are desperately anxious to own their homes. I warmly welcome this amendment and shall vote for it. I urge my right hon. and hon. Friends to do likewise.

The reason why the Labour party opposes this Lords amendment is that it represents a cut in the money spent by housing associations on new building, conversions and improvements. That must follow from the Government's attachment to cash limits. Next year the Housing Corporation and the housing associations can spend only about £680 million, and the Government have made it clear that the cost of paying discounts to tenants to charitable associations must come out of the budget of the housing association movement. The more the tenants of charitable housing associations exercise their right to buy and to receive a mortgage from the Housing Corporation, the less money will be provided for other Housing Corporation schemes. Every pound that goes towards a discount or a mortgage means a pound less spent on improvements, repairs, the acquisition of land or new building.

I shall give the House a startling illustration of how this operates. The Government have based their scheme for allowing the tenants of charitable housing associations to buy—or to require their landlords to buy houses elsewhere—on what was called the do-it-yourself shared ownership scheme. The Minister nods in agreement. That scheme enabled someone in housing need to exercise a combination of the right to buy and the right to rent. He could say to a housing association, "I am in housing need. Will you buy that house and let it to me under the shared ownership scheme?" That provides the precedent for what is proposed for the tenants of charitable housing associations. But what has happened? The do-it-yourself shared ownership scheme has been abandoned because there was not enough money in the Housing Corporation budget to pay for it. At the same time as the right to buy has been thrown to one side the same right is introduced for those who are reasonably well housed. The amendment made in another place gives an advantage to the better housed at the expense of those who are worst housed.

5.30 pm

I am wholly in favour of home ownership, as are all my hon. Friends. To govern is to choose. The Government had two choices. They could have gone for investment or for discounts. They have gone for discounts as against new building. We are strongly opposed to something that will again diminish the amount of new housing and repaired and renovated housing.

I should not need to give the House the statistics, but there is an overall shortage of 800,000 homes. There are
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1 million homes which are unfit. In London alone there are 250,000 people on the housing waiting list. The statistics of housing despair remain appalling. Yet, despite all the shortages, the Government choose to give priority to cash handouts rather than to the provision of new or repaired accommodation. The attitude of the Government to these matters is like a dose of anorexia nervosa being given to a man suffering starvation who has sought advice.

There must be an order of priority. The first priority should be to provide for those in greatest need and not to have massive discounts which represent an open-ended cut in the housing association budget. We strongly oppose the proposals, not because we want to prevent people from owning their own homes but because we want to make the greatest provision for those in greatest need.

I regret very much that the Opposition have taken a negative attitude to the scheme My hon. Friend the Member for Hertfordshire, West (Mr. Jones) and my hon. and learned Friend the Member for Mid-Bedfordshire (Mr. Lyell) rightly put it in the broader context by pointing out that the scheme helps not just those tenants who can take advantage of it put the people about whom the hon. Member for Norwood (Mr. Fraser) spoke at the end of his remarks, the most disadvantaged. It will enable people on the waiting list, who are living in desperate housing accommodation, to get decent homes at an earlier date than they otherwise would have done.

Opposition Members have turned their argument against the right to buy on its head. They opposed the right to buy when we introduced it because they said it would diminish the stock of public rented accommodation and that those who were in a position to buy should be encouraged so to do. When we now introduce a scheme which will do exactly that, and maintain the stock of public rented accommodation owned by housing associations, they say that they do not like that either. They say that we are providing public money but not getting new assets. That comes from a party that at one stage was proposing to municipalise the whole of the private rented sector. How much public money would that have cost without adding anything to the housing stock?

There is disagreement on the role of private tenants and public tenants. We have consistently made it clear that the Government have a mandate for properties that have been provided out of public funds. We have no mandate for property that has been provided out of private funds. That is why we have never extended the right to buy to private tenants, nor do we propose to extend this scheme to private tenants.

The reason why the scheme has been introduced is that tenants of charitable housing association property are the only tenants living in property provided out of public funds who do not have the right to buy. That is the inequity, the disadvantage and the anomaly that we are seeking to put right. Our original scheme was not acceptable to another place and we have introduced this alternative. Far from being dogmatic, as we have been accused, we have been flexible. We have found a scheme which the National Federation of Housing Associations, the organisation involved, supports. It welcomes the fact that members of the housing association movement can now help those on the waiting list by enabling those who have home ownership within their grasp to move on.

In reply to the hon. Member for Islington, South and Finsbury (Mr. Smith), may I say that there will be no
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question of housing associations having to sell property to finance the scheme. I give that categorical assurance. The resources required to fund the scheme will be taken into account in setting the figure for the Housing Corporation budget for future years.

The Minister says that the resources will be taken into account. Can he give a categorical assurance that the amount of money that will be available for conversion, repair and new building will in no way be cut as a result of people exercising their rights under this scheme?

What I said was that the resources required to fund the scheme will be taken into account in setting the figure for the housing corporation budget for future years. We have not begun to look at the budget for next year, 1985–86. We have only just arrived at the public expenditure figures for the current year. It would be going too far to expect me to say anything about years ahead. The resources required will be taken into account.

Subsection (4), as amended, is designed to allow non-charitable housing associations, if they so wish, to have within or add to their objects the purpose of undertaking disposals and acquisitions under the scheme without prejudice to registration under section 13 of the Housing Act 1974. It does not affect or jeopardise their objects. Also, there is no requirement on any housing association that does not want to participate in the scheme so to do. The other housing associations can operate as vehicles for particular tenants if their own housing association is reluctant to get involved. Of course the housing associations that are the vehicle for this will be compensated for the funds involved by the Housing Corporation and there will be allowances to cover their administrative costs.

I am not sure that I can give an off-the-cuff reply. What I can say is that the amendment has been suggested to us by, I think, the Registrar of Friendly Societies. It is fairly technical and will ensure that societies can amend their objects to enable them to participate in the scheme, if they want to, without creating a conflict with the conditions for registration with the registry or the corporation. It makes a consequential change to the powers under section 127 of the Housing Act 1980 for improvement for sale and shared ownership schemes.

The hon. Member for Bootle (Mr. Roberts) suggested that the scheme might be abused by different tenants moving into the same property within months and getting advantage of the discount. I hope I made it clear when I spoke earlier that we envisage a two-year residence requirement before a tenant can exercise his right under this clause.

The Minister still continues to misunderstand the point I was making. I was saying that the same property will continue to provide a discount. One tenant who had received £10,000 because he was a tenant of a charitable housing association might move out. A month later another tenant who has moved in may receive £10,000 because he, a different tenant, is entitled to the money because he has lived previously in other public
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sector property. The same property will earn a discount which does not happen under the right to buy in the council sector.

I must make it clear that the tenant will have to spend two years in the property before he is entitled to any payment under this scheme. So it is not the case that a series of tenants will be able to move in month after month and get the discount.

Another point that must be made is that the charitable objectives of many housing associations would preclude them from rehousing those who were in a position to buy. Their objectives are confined to those in need. We must remember that local authority accommodation can be used in precisely the way that the hon. Member has described under the right-to-buy scheme. The same property can be used to clock up entitlement to discount for a succession of tenants.

I have been asked by several hon. Members about the basis of the estimate of £10 million. We estimate that 1 per cent. of eligible tenants in each of the first two years will give approximately 1,000 sales in each year. At an average price of £20,000 to £25,000, with an average discount of 40 per cent., that gives a cost of £8 million to £10 million for the first year. Shared ownership and mortgages granted by the corporation suggest about £10 million, taking account of the fact that the cost floor will reduce the discount in a number of cases. That is the best estimate of cost that we can provide.

I want to get this straight. The Minister said that an incoming tenant would have had to have lived for two years in the dwelling to be entitled to the discount. That is not the provision of the right to buy under the 1980 Act. Where is that provision amended to mean that it has to be in that dwelling rather than in a public sector dwelling? Is there another amendment, as it does not seem to be in this clause?

As I said, the provisions provide a statutory framework for the scheme, but the details will be dealt with administratively, and that is why the details are not part of the Bill. I can confirm that new tenants must spend two years in the dwelling before they can take advantage of the scheme, and that is the difference between the scheme and the ordinary right to buy.

What is before the House sets out the statutory framework. The tenant will have a statutory right. The details of the scheme will be dealt with administratively and I am happy to give the hon. Gentleman the details that he wants.

We do not know how the scheme will work because the details are not before us, and the Minister has not provided the regulations or the basis of the scheme. If the person moves into the dwelling and has to wait two years before he can buy at a discount, at the end of those two years does he get the discount to which he would be entitled on the basis of the right-to-buy provisions? If he was in a council property for 10 years before moving into the dwelling, after he had lived there for two years, does he get the larger, 12-year discount?

The hon. Gentleman is right. The tenant does not become entitled to any discount until he has been there for two years. Once he has fulfilled the two years, the discount entitlement will take account of previous periods as a public sector tenant.

I had better stop before I am asked any more questions to which the answers are not readily available. We have had a good debate on the scheme. There is clearly a fundamental difference of principle between the two sides of the House. However, we think that this is an imaginative scheme that will be of advantage to tenants and those on waiting lists. It has been warmly welcomed by housing associations. I commend it to the House.

On a point of order, Mr. Deputy Speaker. It appears that we are being asked to vote on something that is not before us. I seek your guidance because I do not understand how the House can vote on legislation described by the Minister but which is in no document that is before the House. Is that in order?

The matter is in order, otherwise it would not be before the House. I realise that Lords amendmens, particularly when there are amendments to them, are somewhat confusing, but I assure the hon. Gentleman that what has taken place is in order. We must now come to a decision, first on the amendment, and then on the Lords amendment.

§
In page 88, line 19, at end insert—
' In subsection (1) of section 127 of that Act (registration of housing associations) for the words from the beginning to "its objects" there shall be substituted the words "Section 13 of the 1974 Act (the register of housing associations) shall have effect as if the additional purposes or objects mentioned in subsection (3) of that section included" and the words from "without" onwards shall be omitted.'.
In page 90, line 47, column 3, at end insert—
'In section 127(1), the words from "without" onwards.'.—[Sir George Young.]